London stocks drop as Credit Suisse crisis reignites bank selloff

The blue-chip FTSE 100 was down 2.7%, hitting its lowest level so far this year with almost all FTSE 350 sectors trading in the red. UK banks resumed their brutal selloff following Tuesday's brief respite, falling 5.3%, after Credit Suisse hit record lows as the bank's largest shareholder said it would not buy more stake on regulatory grounds..

London stocks extended declines as Swiss lender Credit Suisse's drop to a record low in the aftermath of Silicon Valley Bank's collapse sparked a wide sell-off in banking shares. The blue-chip FTSE 100 was down 2.7%, hitting its lowest level so far this year with almost all FTSE 350 sectors trading in the red.

UK banks resumed their brutal selloff following Tuesday's brief respite, falling 5.3%, after Credit Suisse hit record lows as the bank's largest shareholder said it would not buy more stake on regulatory grounds.. Shares of HSBC, Europe's largest lender slid 5%, while Standard Chartered and Barclays both dropped over 7%.

Britain's economy is set to avoid a recession in 2023, but will still contract this year, finance minister Jeremy Hunt said, as he made a budget speech which included measures to speed up economic growth. "The UK economy is going to face by all accounts something that feels a lot like a recession over the course of this year," said Luke Bartholomew, senior economist at abrdn.

Traders are now seeing a 60% chance of the Bank of England keeping interest rates as they are at its policy meeting next week. The oil and gas sector shed 6.4% as oil prices fell over 2%.

The more domestically focussed FTSE 250 midcap index also lost 2.08%, with IG Group falling 6.9% after the online trading platform said its quarterly active clients fell. Prudential dropped 10.3% despite the Asia-focused insurer reporting an 8% jump in full-year profit. The company's chief financial officer, James Turner, also said the insurer had a $1 million exposure to Silicon Valley Bank, which was "minimal" against a total debt book of $23 billion.

The wider life insurance index slumped 7.2%, hitting a more than three-month low.

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